Lightyear in $1.15bn financial services exit

The firm will sell Cetera Financial Group, a 2010 investment from its $850m Fund II. 

Lightyear Capital will sell Cetera Financial Group for $1.15 billion to RCS Corporation, according to a statement.

Cetera provides wealth management services to financial advisors, financial institutions, and tax and accounting professionals. Lightyear created the company in 2010 by acquiring three broker dealer businesses from the ING Advisors Network and rebranding them as Cetera. Lightyear made the initial investment using capital from its $850 million second fund. The deal is expected to close in the second quarter of 2014.

Lightyear began investing in the independent advisory space in 2008 after witnessing an increasing demand for independent investment advice and a shift of advisors from large traditional securities firms to independent firms.

“When we invested in Cetera, we were confident that the independent, advisory-based model would perform well in today’s market,” Lightyear chairman and founder Donald Marron said in the statement.

Lightyear makes control investments in mid-market financial services companies in North America. The firm has raised $2.5 billion of capital across its three private equity funds; the most recent of which closed on $954 million in August 2012, according to Private Equity International’s Research and Analytics division. Fund III had an initial target of $800 million and received commitments from limited partners including the New Mexico State Investment Council andthe Los Angeles Fire & Police Pension System. Lightyear offered 94 cents in co-investments for every $1 invested, according to New Mexico documents.

Founded in 2000, Lightyear is based in New York and is led by Marron and chief financial officer Timothy Kacani, as well as three managing directors.